Oil ministers are meeting in Vienna today and market participants are optimistic a deal can be reached to cut production. Oil is up 7.5% this morning on speculation of a deal. Ordinarily, high oil prices are bad for markets, but these days it is considered a plus.

Donald Trump has reportedly selected Steve Mnuchin for Treasury Secretary. Mnuchin is another Goldman guy, making him the third Goldman Treasury Secretary since the mid 90s. Not much is known about his position on things like the dollar and interest rates. Given Trump’s focus on manufacturing jobs, Mnuchin could be a departure from the strong dollar policy that has been in place for several administrations.

Neither new Commerce Secretary Wilbur Ross nor Steve Mnuchin went out of their way to defend current Fed Head Janet Yellen, saying the decision on the remainder of her term is up to Trump. Donald Trump had been critical of Fed policy on the campaign trail, saying that interest rates were too low. Now that he is an actual politician, he may become more accepting of lower rates, as most politicians usually are. Reagan was the exception, however the 1970s inflation was so bad, people recognized that something had to be done.

Mortgage applications fell 9.4% last week as purchases fell 0.2% and refis fell 16%. Purchases held up reasonably well given the short Thanksgiving holiday.

The US added 216,000 jobs in November, according to the ADP survey. The Street was looking for 160,000 on the ADP number and has forecast 170,000 for Friday’s jobs report.

Personal incomes broke out of their range in October, increasing 0.6% after a string of 0.3% – 0.4% increases. Personal consumption declined however to a 0.3% increase. This bumped up the savings rate to 6% of disposable personal income, the highest since March. The PCE index for inflation is up 1.4% YOY and the PCE ex-food and energy index is up 1.7%. Nothing in this report will change the Fed’s thinking regarding the next Fed meeting.

Loan officers are painfully aware that rates have been going up. Investors have been taking it on the chin as well: the 10 year has had its worst month since 2009. Bonds have lost 2.4% this month, which is about about a years’ worth of interest at these levels. That said, the increase in rates has yet to match the 2013 “taper tantrum.” Another key piece of data: the difference between Treasuries and German Bunds is the highest on record, indicating that the correlation between US bonds and foreign bonds is breaking down. This makes sense as the Fed and the ECB have fundamentally different postures at this point.

Third quarter GDP was revised upward to 3.2% from the advance estimate of 2.9%. We will get one more revision to this number in a few weeks. Upward revisions in consumption drove the increase, while residential investment remains a drag. Business capital investment remains weak as well. The PCE Price index rose 1.4%, which means inflation remains below the Fed’s target rate. We have had a meaningful rebound in GDP after a run of 3 weak quarters.

The Case-Shiller index (considered to be the Dow Jones Industrial Average of real estate indices) surpassed its July 2006 peak in September. The index is up 5.1% YOY. The press release includes a cool table that shows the returns on real estate versus the returns on the stock market and compares those to income growth. Since 1975, real estate has increased almost 5%, and stocks have increased 8%. Since 2000, real estate has outperformed stocks. While stocks have have been a higher returning investment overall, they are typically much more volatile, and you can’t live in an ETF. Also, the press releases doesn’t address the tax benefits of real estate, which would certainly affect the analysis and improve the relative performance of real estate.

Corporate profits rebounded in the third quarter, rising 5.2% YOY after a 3 consecutive negative quarters. The divergence between stock prices (rising) and profits (falling) was creating an untenable situation in the stock market.

Foreclosure starts fell to 56,500 in October, the lowest level in 12 years, according to Black Knight Financial Services. Delinquencies had a small uptick MOM, but are down YOY. Prepay speeds ticked down, but are still up markedly YOY.

Investors return to the markets after the Thanksgiving holiday contemplating a re-litigation of the 2016 Presidential election. Bonds and MBS are up.

Green Party candidate Jill Stein is requesting a recount in PA, MI, and WI. Donald Trump took to Twitter to condemn the effort and alleged that “millions” of votes were fraudulent. The Clinton campaign is keeping its distance but will watch to make sure outside players aren’t interfering with the process. If she manages to turn all 3 states, then she could win. One question that has come up has been whether Russia could have hacked the voting machines. That possibility looks unlikely.

The highlight of the week will be the jobs report on Friday. The Street is looking for 170k jobs added, an unemployment rate of 4.9% and an increase in average hourly earnings of 0.2%.

The FOMC minutes from the early November meeting were a non-event, and the FOMC is definitely setting the stage for a December hike: “Most participants expressed a view that it could well become appropriate to raise the target range for the federal funds rate relatively soon, so long as incoming data provided some further evidence of continued progress toward the Committee’s objectives.” In fact, a “few” participants wanted a hike at the November meeting. The December FOMC meeting is in two weeks.

The FHFA raised the conforming limit from 417k to $424k. This was the first increase in 10 years. They also increased the high balance conforming limit to $636k.

Home Prices rose 0.1% in September and are up 5.4% YOY. Home prices are now within a percent of their peaks from June 2006.

Black Friday saw more shoppers, but less spending than in the past. About 154 million bought something in a store or online over the weekend, but they only spent about $289 as opposed to $300 a year ago. The National Retail Federation attributed the drop in spending to deep discounts offered by retailers. Black Friday online purchases were up 22% YOY.

Stocks are up this morning as commodities rise on anticipated economic strength. Bonds and MBS are flat.

Existing home sales rose 2% to a seasonally-adjusted run rate of 5.6 million in October, according to the NAR. September’s numbers were revised upward to 5.49 million. October’s number is 5.9% higher than a year ago, and the highest reading since February 2007. The median home price rose 6% to $232,200. Total housing inventory dipped to 2.02 million units, which represents a 4.3 month supply at current levels. NAR considers 6.5 month’s worth to be a balanced market. Days on market ticked up to 41 days from 39 the month before. The first time homebuyer accounted for 33% of all

sales, which is up a couple percentage points from a year ago. Now, if we could just get housing starts up to catch up with the increase in sales we could have a real recovery on our hands.

The post-election rise in interest rates is beginning to affect home sales. First time homebuyers are being hit particularly hard. One loan officer has great advice however: the increase in rates may appear dramatic, but the difference in monthly payment often is not. “I tell people, interest rates are 80 percent psychological and 20 percent math. I do the math for them and their next reaction is, ‘Oh that’s all?’ Forty dollars a month, $75 a month. They initially think it’s going to be a lot more painful than that,” said Anker, who added he hasn’t lost any deals yet. ” While we have yet to see any effect in the home price indices (that will probably be a few months out) be prepared for a deceleration in home price appreciation, and maybe even flat / declining prices in the hottest markets.

The Richmond Fed Manufacturing index improved last month from -4 to 4.

Donald Trump took to YouTube last night to give an update on the transition. Probably the biggest news in that was essentially a moratorium on regulations – where for every new regulation, two must be removed. Not sure how that is going to work in practice. The Trans Pacific Partnership trade deal is probably dead at this point as well. Separately, he isn’t going to launch any further investigations on Hillary Clinton.

Stocks are higher this morning on no major news. Bonds and MBS are up small.

Should be an uneventful week with the Thanksgiving holiday. Markets will be closed on Thursday, and SIFMA is recommending an early close on Friday.

Donald Trump continued to interview candidates for cabinet posts over the weekend. For Secretary of the Treasury, he talked to famed investor Wilbur Ross, Blackstone head of real estate Jonathon Gray, and David McCormick of Bridgewater. The “in-depth” discussion with Gray “included the economy, global capital markets and the world financial situation as well as “future legislation regarding the tax code and long-term debt. The Ross meeting covered “negotiating the best foreign deals, American manufacturing and job creation,” as well as “engaging Ambassadors to participate in creating more economic opportunities for America,” Trump’s office said. With McCormick, Trump and Pence talked “global financial markets, currency and the American economy,” and “special emphasis was placed on restoring long-term economic growth rates on an annual basis of four to five percent.” Trump insider Steve Mnuchin and Congressman Jeb Hensarling are considered to be the front-runners, however.

Ever since Trump won, shares in Fannie Mae and Freddie Mac have been soaring. Hedge fund giant John Paulsen has a huge position in the shares and investors are betting that a Trump administration may be more shareholder-friendly than Obama was. Just as Fannie Mae was beginning to turn a profit, the Obama administration re-wrote the rules of the bailout and has taken all of Fannie’s cash flows for the government. The bailout money has now been paid back and shareholders are in litigation with the government over what to do now. Just some numbers: Market cap: 18 billion. 2015 earnings 11 billion. P/E: 1.6.

Quick, what has been the best-performing IPO of the tech sector since the Great Recession? It isn’t the names you would think of like Facebook or Tesla. It is Ellie Mae, who makes software that helps automate the mortgage process. Bears are beginning to bet that a Trump administration will be more friendly to the big banks, who will get back into the mortgage business, which is bad news for Ellie Mae’s clients, who are smaller independent lenders.

So far, it looks like Jeb Hensarling is in the mix to take over as Secretary of the Treasury for Donald Trump. Note he is a politician, not a Wall Streeter. In fact, the banks believe he is a bit of an obstacle for getting real reform. Hensarling is generally viewed as not a friend of the big banks, and he really isn’t that interested in their input. Hensarling does have a plan to reform Dodd-Frank, which would include scrapping the Volcker Rule (which prohibits proprietary trading), reining in the CFPB, eliminating caps that banks can charge merchants for debit card transactions, and reforming the SIFI (systemically important financial institutions) rules. The big banks will need to raise a lot of capital in order to have more latitude however, as his bill requires a 10% capital cushion. Citi, for example, is at 7.4%, which means the banks would need to raise hundreds of billions in new equity capital.

The glory days of the CFPB are numbered. A court ruling that prevents the director from being fired and the potential for a business-friendly Trump Director has made it possible for a bipartisan consensus that the director be replaced with a 5 person committee, and that it be subject to Congressional appropriations. At least one expert believes that will slow down the agency and probably cut its enforcement actions in half. As of right now, if you are a graduate of a top law school and have an interest in financial regulation, the CFPB is the hot place to be.

Bottom line: we could get some regulatory relief, however it will be at the margin and probably not a wholesale change from what we have now. Will it be enough to get the private label securitization market back? So far I have not seen anything with respect to required equity tranches etc, so it is hard to tell. The only name for HUD I have heard is Westchester County Executive Rob Astorino, who is fighting HUD on zoning issues and affordable housing mandates.

Speaking of inflation, the consumer price index rose 0.4% in October, in line with forecasts. Ex-food and energy, it rose 0.1% and is up 2.1% YOY.

The NAHB / Wells Fargo Housing Market Index, a measure of homebuilder sentiment was flat at 63, and is still well above neutral.

Housing starts rose to 1.323 million. This is an increase of 23% YOY, which shows the housing market may finally be getting some traction at long last. This is a 9-year high. Remember, “normalcy” is closer to 1.5 million units, so we still have a lot of room for growth. Building Permits were up 4.6% YOY to 1.23 million.

Initial Jobless Claims fell to 235k last week, which is the lowest level since early 1973, just after the Vietnam War draft ended. Employers continue to hang onto their workers.

House prices increased 7% in October, according to RedFin. Inventory dropped by 8.6% YOY, which is the 13th consecutive monthly drop. Homes stayed on the market an average of 49 days, a drop of 5 days from a year earlier. 21% of all homes were under contract within two weeks, and 20% sold for more than their asking price.

Average FICOs for closed loans dropped somewhat in October to 730 from 731, according to Ellie Mae. Purchases accounted for 53% and refis accounted for 47%.Time to close was steady at 48 days. ARMS slipped to 4% of all loans, however as rates increase they will undoubtedly become more popular at some point.

Consumer comfort increased last week, according to Bloomberg.

Democrats named Chuck Schumer Senate Minority Leader yesterday. As a practical matter, he comes from NY so he should be at least somewhat sympathetic to the financial sector, which could go a long way in helping fix some of the issues with Dodd-Frank.